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2010 will be the year Chinese auto companies go global
Yang Jian | 2010/1/13

SHANGHAI -- Auto sales in China grew by nearly 50 percent year-on-year in 2009. 13.6 million units were sold in the year, of which 10.3 million units were passenger vehicles. That pushed China ahead of the United States as the largest auto market in the world.

2009 was a record breaking year for China. So, what to expect from the market here in 2010?

Last year's stellar increase is unlikely to be repeated. After receiving a big boost from government stimuli, growth in 2010 will surely slow.

For me the most exciting thing about 2010 is that it will be the year that Chinese automakers start going global in earnest.

By using the expression "in earnest" I want to draw attention to a new approach to marketing vehicles overseas that is now underway.

Before the recent global downturn, Chinese auto manufacturers including Chery Automobile Co. and Zhejiang Geely Holding Group Corp. peddled cars in other emerging markets in much the same way that Chinese firms export toys.

They would ship and sell a couple of thousand of cars here and there and seldom bothered to establish a dealership network. Since their brand recognition outside China was very low, they competed solely on price.

Such a rudimentary way of selling cars overseas proved to be unsustainable and extremely vulnerable to market downturns. In 2009, Chinese companies only exported a total of 149,600 passenger vehicles, a slump of 57 percent from 2008.

But this year Chinese automakers will start to do it differently.

As the situation stands, at least one company will have the opportunity to operate overseas by taking over an international brand.

Ford is expecting to complete the sale of its Volvo Car unit to Geely in the second quarter. Once the deal is complete, for the first time ever a Chinese company will start operating an international brand not just in China but in mature markets as well.

Sichuan Tengzhong Heavy Machinery will have a similar opportunity if it can convince the Chinese government of the value of snapping up Hummer, a brand associated with gas-guzzling models. 

At the same time, other Chinese companies are expecting to sell vehicles under their own brands.

Shanghai Automotive Industry Corp. (SAIC) aims to sell the Wuling-badged minivans in India, the world's second largest developing market, via a joint venture it will establish with General Motors early this year. The minivans are developed by its majority-controlled subsidiary SAIC-GM-Wuling Automobile Co. with GM's technical support.

After gaining approval to sell its small vehicles in Europe, Great Wall Motor Co. plans to market its vehicles in the Baltic states of Estonia, Latvia and Lithuania through UK distributor I.M. Group, before moving on to other countries in the single market.

For China's car industry, the year of going global is at hand. Aided by newly acquired international brands and foreign partners, the opening up of new markets by Chinese automakers will soon be underway.

Pictured:Yangjian is the Managing Editor of Automotive News China.

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